By CINDY LADAGE
Illinois Correspondent ROCKFORD, Ill. — As the Mississippi River breaks through levees and floods Iowa, Illinois and southern Wisconsin, outlook for grain changes on a daily basis. Livestock producers are wondering if they will have enough to feed their stock, if the grain is available and what the cost will be.
Lori Weaver, editor of Feed Network Industry, said producers have much to consider. “We are seeing a lot of corn still sitting underwater around southeastern Wisconsin,” she said. “Everyone has heard about Iowa, and parts of Indiana are hurting as well.”
Weaver said during the third week in June she heard some areas in the Midwest had more than 14 inches of rain in the prior two weeks. “We already had a cold, wet spring and crops in this area were already late,” she added.
Similar comment came from Rod Weinvierl, executive director of the Illinois Corn Growers Assoc.
“I would say we are facing two issues,” he said. “One, the flooding in Iowa is affecting the levees along the Mississippi in Illinois and flooding acres. This will have a localized effect. We can’t get a feel for how fast the water will go down and this affects a lot of acres, but in the big sense, we are not affected in Illinois like those in Iowa and Wisconsin.
“The second issue is the continual rainfall that affected southern Illinois. They are way behind the optimal planting dates and their averages won’t be as good.”
With a bit of optimism, Weinvierl said he is not throwing in the towel yet. “We (in Illinois) could still have an average crop, but for that, we need great summer weather and optimal rainfall,” he said.
Weaver said flooded acres that were to be corn now may be switched to beans or other crops, reducing corn harvest even more.
“The rate now, according to the last USDA estimate,” Weaver said, “was that the expected corn production is about 11.7 billion bushels, which is already 10 percent less than last fall harvest, and this has been going down every week.”
While USDA can estimate corn acres planted, Weaver added what farmers actually do is an unknown factor.
“One of the wild cards out there is what farmers will end up doing where there is flood damage, because they have some choices,” she said. “They can leave the land idle and collect flood insurance, they can replant it in soybeans – but the soybeans don’t like the wet soil, so that is iffy – or they can just put a cover crop on to keep the ground from washing away.
“Just because there are a lot of options don’t mean that we will recover with the corn.”
Weinvierl is also seeing a variety of farmer actions.
“Some are switching corn to beans or sorghum and milo. Some farmers just kept planting corn on bean acres rather than switch, and some are even harvesting wheat and double cropping corn, which I’ve never seen before.”
To add insult to injury, Weaver said this year there is a huge export demand for grain, with the low U.S. dollar value, but added, “They are having trouble shipping what is available right now on the Mississippi. I have heard some pretty amazing stories about barges sitting still, and the cost to the companies.
“Overall, having the Mississippi closed is costing the shipping industry $1 million per day. The last estimate I heard was that it will be a couple weeks ‘till it is done. Here in Wisconsin, you see the blue skies and they think this is done but really, the river is just cresting.”
Transport woes are not only affecting those shipping by barge, but by train as well. Mike Jackson of Johnson Grain in Waverly, Ill., ships grain from the farmer to the market.
He said, “Our business is based on volume. We are a through-put from farmers to feed. The shorter crop will affect our bottom line. The marketplace is already seeing the change.”
With transportation costs up, higher fuel costs and the market increasing over the lower yields, higher feed prices are probably a reality for producers this fall.
“Our best guess is that with late planting, yields will be reduced, even though right now corn is looking a lot better,” Jackson said. “Yields will be lower, but we are just getting a grip on how much. We will handle less grain than last year and this impact is driving corn prices higher.”
Although the focus has been on the Midwest, Weaver pointed out the South is facing other issues.
“Here we are flooded in the Corn Belt, but in North Carolina, there are hot drought conditions, and I am hearing the same thing in Texas. This is the year that the American farmer can really step up to the plate and have more corn available and instead, we have been thrown a curve ball by the water,” she said.
As for the outlook this fall, she added, “We know that the cost will continue to go up. We have been looking at what effect this will have for ethanol and on the feed industry. We have seen ethanol plants already close, corn prices now just slightly under $8 per bushel – this is double last year.”
The increased prices are needed, according to Weinvierl who said the expense of putting in this year’s crop is so much higher.
“Producers need the higher prices, with diesel and other input costs going up, to justify planting at this late date. People don’t understand that strong prices are needed,” he said.
“The energy cost this year is huge, so the risk is much higher. The more crops that are planted, the more it will benefit livestock owners three months from now.”
What will producers do with increased feed costs?
“Producers will be sending animals off younger and sooner,” Weaver said. “Initially there will probably be a slight dip in meat prices for consumers because of more meat on the market, but this will be temporary. The slight dip will be when the animals hit market, but then beyond that you will see meat prices climb higher, along with corn and fuel prices.”
For more information from Weaver, check out the Feed Industry Network website at www.feedindustrynetwork.com |
